Europe pares losses to close flat after weak US data

European equities trimmed losses on Thursday and closed flat, rebounding from heavy selling earlier in the session, as weak data from the U.S. helped to curb expectations of a rate rise from the U.S. Federal Reserve.

Global selloff

The pan-European Stoxx 600 index closed flat to higher but with some major European bourses finishing in negative territory. The benchmark provisionally closed 0.18 percent higher. It had recovered from earlier losses of over 1 percent with global sentiment dented by comments from Fed chair Janet Yellen and a sharp selloff in the fixed income markets.

Weekly U.S. jobless claims, which came in much weaker than expected, helped to give equity markets a lift, as traders pushed back the timing of an interest rate hike.

Initial claims for state unemployment benefits rose 3,000 to a seasonally adjusted 265,000 for the week ended May 2, the Labor Department said on Thursday. Claims for the prior week were unrevised at 262,000, which was the lowest reading since April 2000.

Bond yields fell back after the figures and also helped market participants to look past comments from Yellen who said Wednesday that equity valuations were generally quite high.

Benchmark U.S. 10-year note yields traded as high as 2.27 percent before edging down to around 2.23 percent. Thirty-year bond yields also traded above 3 percent for the first time since December, before trading around 2.96 percent.

UK votes

Thursday is polling day in the U.K.'s general election that is almost certain to lead to a hung parliament, where no one party holds a majority of seats.

A YouGov poll on Wednesday showed the incumbent Conservative Party and the opposition Labour Party, tied with 34 percent of the vote.

In other European news, Greece's economic nightmare continues, after European lenders dashed any hopes of an aid-for-reform deal next Monday when the Eurogroup of euro zone finance ministers meets.

"Lots of issues have to be solved, have to be deepened more, with more details, so there will be no agreements on Monday. We have to be realistic," Eurogroup chief Jeroen Dijsselbloem said on Wednesday, Reuters reported.

Commerzbank up 3%

Earnings season continued on Thursday, with operating profit at Commerzbank's banking group more than doubled in the first quarter to 685 million euros ($778.2 million) from the same period a year ago. Shares of the bank finished higher by 3.4 percent.

Meanwhile, pre-tax profit at telecoms firm BT came in at £842 million in the fourth quarter, up 13 percent from the same period in 2014. Shares of the group were caught in the wider market fall and finished lower by 0.2 percent.